McGrath told the Sunday Independent the regulatory system across the EU appeared to only be as strong as its weakest link, with Irish and other European consumers negatively affected by a failure in another member state.

The passporting rules allow insurers that are prudentially regulated in one European member state to sell policies in another.

"We can't afford to have another fiasco like Setanta, where you have a battle played out in court as to who is liable for claims," McGrath added, referring to the legal row between the Insurance Compensation Fund and the Motor Insurer's Bureau of Ireland (MIBI).

The Court of Appeal ruled that MIBI should have to foot the bill, but the MIBI is appealing that to the Supreme Court.

Finance Minister Michael Noonan has previously signalled that he is open to looking for changes to the European regime.

Speaking last September, he told the Dail he would ask it to consider what lessons could have been learned from the Setanta collapse "and if there are any changes in domestic law which would be required or if there is any advocacy which we could conduct in Europe to improve the situation to ensure there is no repeat".

The Enterprise collapse leaves customers braced for further upward pressure on motor premiums, which have soared over the last year.